National Rental Affordability Scheme Finance
Are you thinking of buying a National Rental Affordability Scheme (NRAS) approved property as your next big investment?
Whilst the tax benefits are advantageous, you may have difficulty financing the purchase.
Most lenders will not accept any form of NRAS property as security for a home loan. Read on to find out which property types are acceptable and how to get approved!
How much can you borrow?
The amount that you will be eligible to borrow depends on the consortium that you use:
- ALL NRAS: If your company is not listed then we can finance up to 80% of the property value.
- 4 Walls Ltd: 90% of the value of the property.
- Affordable Housing Consulting Pty Ltd (AHC): 90% of the value of the property.
- Affordable Management Corporation (AMC): 90% of the value of the property.
- Aspire: 90% of the value of the property.
- Brisbane Housing Company (BHC): 90% of the value of the property.
- Community Housing Canberra Ltd (CHC): 90% of the value of the property.
- Ethan Affordable Housing: 90% of the value of the property.
- Providence Housing Pty Ltd: 90% of the value of the property.
- Quantum Housing Group (QHG): 90% of the value of the property.
- Queensland Affordable Housing Consortium (QAHC): 90% of the value of the property.
- Questus: 90% of the value of the property.
- Urban Affordable Housing Association (UAHA): 90% of the value of the property.
- Yaran: 90% of the value of the property.
- Other schemes: We can lend up to 80% of the property value.
- Construction loans: Building a new investment property for use under an NRAS scheme is acceptable, as long as the consortium / scheme that you are using is accepted by the bank.
- Low doc loans: N/A.
- Discounts: Competitive professional package and basic home loan discounts are available.
Do you need help applying for a loan to purchase an NRAS property? Please call us on 1300 889 743 or enquire online and one of our expert mortgage brokers will call you to discuss your options.
Which joint venture consortiums are accepted?
One of our lenders can accept several “non-entity joint venture consortiums” which include Yaran, Affordable Housing Consulting Pty Ltd (AHC), Affordable Management Corporation (AMC), Aspire, Quantum Housing Group (QHG), Ethan Affordable Housing & Questus.
Which head lease schemes are accepted?
The Queensland Affordable Housing Consortium, Providence Housing Pty Ltd & the Brisbane Housing Company (BHC) are currently the only “head lease” NRAS schemes that are accepted.
The QAHC & BHC:
- Provides a joint venture Head Lease to investors.
- Manages the NRAS 10 year compliance requirements.
- Allocates and supervises property management services.
NRAS properties administered by the QAHC & BHC are rented at 25% below the market rental rate.
Other consortium providers currently have restrictions which the banks find unacceptable for mortgage purposes, or the banks have not yet investigated and approved for residential lending.
Do you need help to apply for a NRAS mortgage? Please enquire online or call us on 1300 889 743 to speak to specialist mortgage brokers that will help you get approval for your home loan.
Why are only some consortiums accepted?
This lender has investigated the legal structure of these consortiums and has determined that the legal structure that is used by their investors will no impact the bank’s security position.
Please note that we can accept any consortium as long as your loan is for a maximum of 80% of the property value. We can apply for a higher loan amount if your consortium is one of the ones listed above.
My bank will not lend me any more!
Did you know that some of the lenders will not take the tax benefits of an NRAS investment property into account when they are assessing your ability to repay the debt?
This reduces your borrowing capacity and as a result reduces the number of investment properties that you can buy.
The good news is that if you are borrowing up to 80% of the property value then one of our lenders can take these tax benefits into account.
As a result you can buy more real estate assets and receive a larger tax incentive from this scheme.
Why are the banks so conservative?
When a property is rented via the NRAS, it becomes more difficult to sell as a long term lease is registered on the title.
The end result is that if the property is sold, the property is still subject to the terms of the lease and the new owner must continue to rent the property via NRAS.
This reduces the marketability of the property as only a sub group of property investors would be interested in buying it.
Because the property is more difficult to sell lenders are hesitant to take the property on as security for a mortgage / home loan.
What is NRAS?
The National Rental Affordability Scheme (NRAS) is a legislative initiative which aims to increase the supply of new rental dwellings and improve rental affordability.
Investors who purchase or construct rental properties under this scheme agree to rental rates below normal market rents. In return, they may be eligible for tax incentives.
Generally properties are rented at 20% – 25% below market rates.
NRAS properties are rented to tenants who meet the NRAS eligibility criteria, and are administered by a government approved Consortium.
How can the banks identify an NRAS property?
Lenders can identify that the property you are buying is part of the National Rental Affordability Scheme.
They can see this from the following references being listed on the Valuation, Title Search, Contract of Sale or Building Contract:
- National Rental Affordability Scheme,
- Head Lease, or
- Non Equity Joint Venture Agreement.
Or the lender can identify the property as an NRAS investment via the name of the consortium:
- Affordable Housing Consulting Pty Ltd (AHC),
- Affordable Management Corporation (AMC),
- Ethan Affordable Housing,
- Providence Housing Pty Ltd,
- Brisbane Housing Company (BHC),
- Community Housing Canberra Ltd (CHC),
- Quantum Housing Group (QHG) AKA Accelerated Wealth Systems,
- Queensland Affordable Housing Consortium (QAHC),
- Urban Affordable Housing Association (UAHA), or
- 4 Walls Ltd.
Do you need help from an expert?
Our mortgage brokers are experts in helping people to buy properties leased via the NRAS!
Please call us on 1300 889 743 enquire online and one of our mortgage brokers will help you to apply for a loan with a lender that can help with your situation.